Investing Success

The 3 Keys to Investing Success

BUSINESS

Investments are the best way to grow your wealth way above the inflation rate and help you achieve your financial goals. But while investing, you should always remember there are risks involved even in the most secured investment vehicle.

However, keeping a few keys of investments in mind can help you make better decisions. So, here are the three keys to investing success:

Make Investing a Habit

A lot of people start out their investing journey with a small amount. And for most of them, the best chance to acquire measurable wealth is developing the habit of regular investment. You would be surprised to know how much difference it can make to make even small investments regularly for a long period.

Let’s take two examples. One, in which you put $5,000 in a savings account to earn safe 2-3% interest annually for twenty years. Second, where you gradually increase your monthly investments (starting from $50/month) for twenty years, assuming an average of 10% interest.

In the first example, your money will grow by $7,666. This is almost 100% guaranteed growth but is this enough for retirement?

In the second example, suppose you put $50/month for five years, raise it to $100/month for the next five years, and keep growing it every five years till you reach $300/month. This can fetch you $100,000K profits, which is so much better than a mere $7,666.

Don’t Take Unnecessary Risks

A lot of people may have advised you there are certain risks in investing your money, and you can lose all or a major part of the invested money. Well, that’s true as far as you’ve made reckless investment decisions.

While taking calculated investment risks such as investing in the stock market, knowing the company’s future endeavours, projects undertaken, financial ratios, etc., can help you get good ROIs.

If you’re looking for a more secure & less risky investment option, then investing in virtually ironclad guaranteed investment vehicles is the best option for you. This can include investing in government bonds and similar investment opportunities.

However, you should always invest with the objective of getting a higher interest rate than the inflation rate. Otherwise, you’d be at great risk of losing money to inflation. And yes, even government-guaranteed investment vehicles have the risk of a lower interest rate than the inflation rate.

Set Exciting Goals

Goal-setting is an important part of investments that depends on your risk-taking ability and preferences. However, if you’re investing with a generalized goal such as comfortable retirement or financial cover, then you might face trouble measuring progress.

This calls for categorizing your goals in three ways:

  • Short-term goals: This category can include goals like a vacation in a foreign country.
  • Medium-term goals: This category can include something that’s expensive in the short term, such as buying your dream home.
  • Long-term goals: Comfortable retirement and college education for kids are typically long-term goals for many people.

These investing keys are not secrets, neither are they any guarantees. However, if you focus on them, you can move towards a more successful investment plan and more likely to achieve your goals.